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Department of the Treasury
STATE EXPENDITURE RECOVERIES
FROM THE FEDERAL GOVERNMENT

NO: 94-26-OMB

AGENCY: OFFICE OF MANAGEMENT & BUDGET

EFFECTIVE DATE: JULY 1, 1993

EXPIRATION DATE: INDEFINITE

SUPERSEDES: 87-09-OMB

SUBJECT: STATE EXPENDITURE RECOVERIES FROM THE FEDERAL GOVERNMENT

ATTENTION: DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS

FOR INFORMATION CONTACT: RICHARD BRUNO
PHONE: 292-5959

Expenditures billed and collected from the Federal Government often include
amounts which represent non-matching State appropriations or the use of State
owned or financed resources. Examples of such appropriations and resources
include items such as depreciation expense and overhead costs that are
chargeable to federal programs directly or through a direct cost allocation
method.

While these expenditures may be allowable charges to the Federal Government,
they represent recoveries to the general operation of State Government. The
procedure of applying collections from the Federal Government for these
expenditures to outstanding federal accounts receivable balances is not in
accordance with proper accounting practice. Such a procedure results in the
build up of federal control account balances and the understatement of State
fund balances.

Proper accounting procedures and controls require that expenditures collected
representing depreciation or overhead items directly appropriated in
non-federal accounts for non-federal purposes be credited upon receipt to
a state revenue budget. These collections shall not be applied to open
accounts receivable balances nor returned to a state expense budget account.

This policy will take effect immediately. Agencies will transmit that portion
of receipts from the Federal Government representing the recovery of state
provided non-matching resources as described above into appropriate revenue
budgets.

Richrd F. Keevey
Director

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